How safe are your 401(k) savings? The answer might surprise you.
Are you ready for a scary story? If so, read So you think your 401(k) money is safe from the LA Times. It’s about theft from 401(k) plans and how little money can be recovered for those whose money has been stolen.
By law, all assets in 401(k) plans must be covered by private insurance policies known as fidelity bonds. But the bonds are required to cover just 10% of the retirement plan’s assets or $1 million, whichever is less.
At companies with fewer than 100 employees… the plans are not subject to annual independent audits that could deter embezzlement.
The story does say that theft from the 401(k) plans of “large companies” is rare. It’s in smaller companies, when an employer directly manages his or her employee’s retirement funds that the risk is most prevalent.
We’ve talked before here about the Pension Benefit Guaranty Corp. that guarantees pensions, but that doesn’t cover a 401(k) plan at all. If it’s gone, the PBGC can’t do a thing for you.
Want to know more? Read the story for more shocking details.
